U.S. Chamber warns against Trump's 'highly dangerous' NAFTA demands

WASHINGTON (Reuters) - The U.S. Chamber of Commerce warned on Friday that the Trump administration was making “highly dangerous demands” in the North American Free Trade Agreement modernization talks that could erode U.S. business support and torpedo the negotiations.

U.S. President Donald Trump enters the East Room to host an event to commemorate Hispanic Heritage Month at the White House in Washington, U.S., October 6, 2017. REUTERS/Kevin Lamarque

John Murphy, the chamber’s senior vice president for international policy, said the largest U.S. business lobby was urging the administration to drop some of its more controversial NAFTA proposals, including raising rules of origin thresholds to “extreme” levels.

“We’re increasingly concerned about the state of play in negotiations,” Murphy told reporters.

U.S., Canadian and Mexican negotiators are preparing for a fourth round of talks to update the 23-year-old trade pact next week in a Washington suburb, Oct. 11-15.

U.S. companies large and small were worried about a proposal by U.S. Trade Representative Robert Lighthizer to add a five-year termination clause to NAFTA, Murphy said.

He said there was also concern about Lighthizer’s proposal to reduce Canadian and Mexican companies’ access to U.S. public procurement contracts, and to include a U.S.-specific content requirement for autos and auto parts.

“We see these proposals as highly dangerous, and even one of them could be significant enough to move the business and agriculture community to oppose an agreement that included them,” Murphy said.

He also voiced similar concerns about U.S. proposals for revamping dispute settlement mechanisms and trade protections for seasonal U.S. produce.

Some U.S. lawmakers and congressional staff are also growing increasingly concerned that the talks can reach a successful conclusion. House Ways and Means Committee Chairman Kevin Brady, a pro-trade Republican, has invited Canadian Prime Minister Justin Trudeau to speak to the tax- and trade-focused panel on Wednesday as negotiators return to the table, a committee spokeswoman said.

WORRY ON AUTOS CONTENT

Inside U.S. Trade, a trade publication, stirred concerns among auto industry groups by quoting unnamed sources as saying that the Trump administration was also moving forward with a bid to increase North American content requirements for autos to 85 percent from the current 62.5 percent, with a new 50 percent U.S. content requirement.

U.S. Trade Representative (USTR) spokeswoman Emily Davis declined to comment on the report, but said President Donald Trump had been clear about the need to shake up the agreement governing one of the world’s biggest trade blocs.

“NAFTA has been a disaster for many Americans, and achieving his objectives requires substantial change,” she said. “These changes of course will be opposed by entrenched Washington lobbyists and trade associations.”

Officials from auto industry trade groups said they had not seen a rules of origin proposal with such stringent targets.

“Forcing unrealistic rules of origin on businesses would leave the U.S. unable to compete by increasing the cost of manufacturing and raising prices for consumers,” said Cindy Sebrell, a spokeswoman for the Motor Equipment Manufacturers Association, which represents auto parts manufacturers.

Karen Antebi, the trade counselor at Mexico’s embassy in Washington, told a forum on Friday that while there were “rumors” of a 50 U.S. percent content demand for autos, formal texts had not been proposed on rules of origin.

“Mexico has been firm and consistent that country specific rules of origin within the NAFTA would be unacceptable,” she said.